Saudi surges 7.4pc in heavy trade

26/08/2015 06:05 AST

Saudi Arabia's stock market surged 7.4 per cent on Tuesday as the region rebounded from several days of heavy selling, encouraged by stronger oil prices and rising global bourses.

The main Saudi stock index's leap to 7,543 points was accompanied by the highest trading volume since May 2014, a positive technical signal. It followed a slide which had taken the index down 23 percent in August, erasing over $100 billion of market value.

The bourse's rebound, which accelerated in late trade, partly eased concern about pressure on the Saudi riyal's peg to the US dollar. One-year dollar/riyal forwards fell 15 percent and five-year Saudi credit default swaps, used to insure against a sovereign debt default, dropped to 100 basis points from 120.

Fund managers are unwilling to say Gulf markets have bottomed, though, as long as oil prices haven't established a clear floor. Technical indicators suggested the stock markets were very oversold for the short term, making a temporary rebound likely.

Nevertheless, Tuesday's recovery in Saudi blue chips suggested some institutional investors felt the market had become reasonably valued after its slide.

Top petrochemical firm Saudi Basic Industries soared its 10 percent daily limit, as did Alinma Bank. Miner Ma'aden gained 8.4 percent.

Other Gulf bourses closed before global markets had extended their gains. Dubai's stock index surged 4.6 percent to 3,558 points, Abu Dhabi climbed 1.6 percent and Qatar added 3.2 percent.

United Arab Emirates real estate shares in particular were bought back, with blue chip Emaar Properties up 3.4 percent and DAMAC Properties surging 7.7 percent. Abu Dhabi's Aldar Properties gained 7.0 percent.

Some speculative shares favoured by Dubai retail investors soared. Amlak Finance jumped its daily 15 percent limit and builder Arabtec added 9.8 percent.

Qatar's most heavily traded stock, Vodafone Qatar, climbed 4.2 percent. Egypt's market rose 2.8 percent as China's decision to cut interest rates and bank reserve requirements eased, at least temporarily, the panic in emerging markets.

All of the 10 most heavily traded Egyptian stocks rose with beaten-down property developer Palm Hills Development up 8.7 percent.

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